Essential Long-Term Care and Insurance Planning Strategies

Long-Term Care (LTC) Providers

Funding sources include: Family, Self-Insure, VA, Medicare, Medicaid, and LTC insurance.

Benefits of LTC Policies

• In-home coverage
• Adult day care
• Hospice

LTC Policy Provisions

• Bed reservation
• Elimination period
• Reimbursement vs. Indemnity

Triggers for LTC Benefits

Loss of ability to perform Activities of Daily Living (ADLs): Eating, dressing, bathing, toileting, transferring, and continence.

Sources of Income Replacement

• Savings
• Borrowing from relatives or banks
• Selling assets

Disability Income Policy Riders

• Cost of Living Adjustment (COLA)
• Guaranteed Issue
• Social Insurance Supplement
• Return of Premium

Business Overhead Expense Coverage

Qualified reimbursable expenses include:

• Salaries of non-producing employees
• Rent, utilities, and licenses
• Legal fees, forms, and business insurance premiums

Retirement and Personal Planning

Steps in the Planning Process

1. Identify issues
2. Assign priorities
3. Analyze
4. Develop plan
5. Implement plan
6. Repeat process

The Planning Team

Attorney, accountant, trust officer, realtor, counselor, insurance agent, and the client.

Annuity Components and Classifications

• Number of lives covered: Single, joint life, survivorship
• Time when benefits begin: Immediate, deferred
• Method of purchase: Lump sum, installment
• Tax treatment: Qualified, non-qualified

Annuity Payout Options

Straight life, refund, installment, joint, joint and survivor, and temporary annuity.

Life Insurance Planning

Methods of Determining Coverage

• Total needs analysis
• Multiple of gross earnings
• Scientific guess

Financial Goals for Total Needs

Last expenses, readjustment period, dependency period, education, and mortgage payoff.

Health Insurance and Cost Containment

Cost Containment Features

• Second surgical opinion
• 24-hour notice for ER
• Concurrent review
• Retrospective review

Group Medical Providers and Delivery

• Providers: Insurance companies, BC/BS, HMO, Self-funding
• Delivery Systems: PPO, Point of Service (POS), HMO

Insurance Contract Fundamentals

Elements of a Valid Contract

• Agreement (Offer and Acceptance)
• Consideration
• Competent parties
• Legal purpose

Types of Term Insurance

• Level term
• Annual renewable
• Decreasing term

Universal Life Insurance Components

Cash, mortality charges, policy expenses, cash value, interest, and death benefit.

Dividend Options (CARPO)

• Cash
• Accumulation of interest
• Reduce premium
• Paid-up additional insurance
• One-year level term

Types of Beneficiaries

Primary, contingent, revocable, and irrevocable.

Business Succession Planning

Objectives for Remaining Owners

• Full control of business
• Fair and reasonable payment
• Smooth transfer of ownership

Buy-Sell Agreement Issues

Death, disability, retirement, termination of employment, and valuation.

Funding Methods

Personal funds, sinking funds, borrowed capital, life insurance, and payment to heirs.

Key Person Insurance Characteristics

Salary size, decision-making powers, productivity, and unique talent.